How many times have we gone online, searched for and found the perfect item, only to get to the checkout and find ourselves unable to pay the way we want? Whether you wanted to use PayPal or a local card, or even Apple Pay, it is frustrating to have to dig through your wallet for the one payment method that this online store accepts. Would you return to this store a second time? Worse yet, what if you are unable to pay for the item using any of the methods offered? This is the reality for many Latin American consumers attempting to purchase from international e-commerce merchants.
With an estimated large unbanked population (70% of those in LATAM and the Caribbean), and many localized card schemes or unique alternative payment options, your business could be failing to retain huge numbers of customers by not offering localized payment options. We look at some of the reasons behind high checkout abandonment in Latin America, and some of the best ways you can combat it and ensure customer loyalty.
Why Customers Jump Ship
The Latin American region has one of the highest shopping cart abandonment rates, with a whopping 75.3% failing to complete checkout in 2016, according to Statista. While there are a number of different factors contributing to this, one of the key reasons is a lack of localized payment methods. The region is marked by a huge variety in payment methods. Some countries, like Mexico, prefer cash-based payments and have a variety of ways to allow the unbanked population to pay without a bank account. Indeed, it is estimated that as many as 63% of the population of Mexico do not have access to an account. On the other hand, countries like Chile and Brazil have a lower unbanked population (26% and 30%, respectively) and favor cards to make e-commerce transactions.
Not All Card Payments Are Equal
However, on that note, it is important to understand that cards used in these countries are not necessarily Mastercard or Visa. Take Brazil, as an example. 64% of online consumers used credit cards in 2017, and half of those e-commerce sales were purchase with installments. However, only 22% of credit cards issued in Brazil are enabled for international purchases. This leaves the international retailer with a huge problem. If customers cannot pay for your goods easily, they are unlikely to return. Thus, it’s important to take into account the localized nature of card payments in order to avoid losing a significant market share in the LATAM market.
The Value of the Repeat Customer
But why is it so important for your e-commerce business to optimize your checkout process? Well, one key factor is repeat business. A good checkout process is highly likely to return customers to your site. Particularly as an international merchant. Importantly, returning customers cost your business seven times less than enticing a new customer into your checkout process. This is down to a combination of factors including marketing spend and advertising costs. Additionally, customers with a positive checkout experience are likely to recommend your business to friends and family.
For an international e-commerce merchant, this is even more important. Local retailers still make up a large proportion of the e-commerce market in Latin America. This scenario could eventually change in light of how recently Amazon has entered the Brazilian market, but nevertheless local players remain strong competitors in Latin America’s online retail market.
By offering local payments, your business can compete on like-for-like terms with local retailers. As such, international merchants with local payment methods and currency localization are more likely to convert customers, and more likely to bring them back to their site.
How to Navigate These Unique Markets?
The question remains, then. If localized payment methods are so essential for repeat business, how does one navigate the complexities of the Latin American market? First, it is essential to work with local experts, such as a payment aggregator like BoaCompra. Not only can aggregators advise you regarding checkout optimization and handle the integration of the preferred local payments on your behalf, they are also able to assess and adopt new methods (like e-wallets) as they increase in popularity.
Secondly, data is your friend. Collect data on your checkout process, stage by stage, and assess whether specific stages are causing a rise in drop off rates. This information can better inform your checkout design and reduce barriers to entry. This two-pronged approach will ensure not only that you entice customers in to begin with, but that they return to your store again and again.
Get in touch with us to learn how BoaCompra can help your company expand to this promising market: